Glossary of Terms

Below is a comprehensive list of key merchant banking service terms and definitions that will be helpful during the process of establishing your new merchant services account with National.

ABA Routing Number

A unique nine-digit number assigned to each banking institution that is used to identify the bank and direct ACH debits and credits. The ABA routing number is usually found at the bottom of a personal or business check.

Automated Clearing House (ACH)

Automated Clearing House is a group of processing institutions linked by a computer network to process electronic payment transactions between financial institutions.


An acquirer is a Visa/Mastercard affiliated bank or bank/processor alliance that is in the business of processing credit card transactions for businesses and is always acquiring new merchants.

Address Verification Service (AVS)

A service supported by Visa, MasterCard, Discover, and American Express that verifies a payment cardholder's billing address against the one on file with the issuer. AVS is designed to help combat fraud in non-face-to-face transactions.


An adjustment is initiated by the acquirer to correct a processing error. The error could be a duplication of a transaction or the result of a cardholder dispute. The acquirer debits or credits the merchant DDA account for the dollar amount of the adjustment.

Affinity Card

A card offered by two organizations: one a lending institution, the other a non-financial group. Schools, non-profit groups, pro wrestlers, popular singers, and airlines are among those featured on affinity cards. Use of the card usually entitles holders to special discounts or deals from the non-financial group. See also co-branded cards.

American Express (AmEx)

A company that issues payment cards and operates its own processing network.


The indication that a sales transaction was approved.


A procedure used by an acquirer on behalf of the merchant to resolve a chargeback-related dispute with a payment card issuer.


A group of regulatory agencies that regulate bankcard activities. Includes Mastercard and Visa.

ATM or Debit Card

The payment card used in an ATM for deposits, cash withdrawals, account transfers, and other related transactions. A PIN must be entered to withdraw cash and access account functions. An ATM card may also be used to make a debit purchase if the merchant has a PIN pad to accept the key entry.


The process of verifying that a credit card has sufficient funds or credit available to cover the amount of a sales transaction. An authorization is obtained for every sale. An approval response in the form of a code is sent to a merchant's POS equipment from a card-issuing financial institution that verifies availability of credit or funds in the cardholder's account to make the purchase.

Authorization Code

A code that a credit card issuing bank returns in an electronic message to the merchant's POS equipment that indicates approval of the transaction. The code serves as proof of authorization.

Authorization Fee

All processors charge a flat fee per transaction that is either listed separately or bundled with your rate. Each card transaction submitted to the associations incurs an authorization fee.

Authorization Only or Auth Only

Used to reserve an amount against a credit card's available credit limit for intended purchases. Authorization Only is most frequently used in the lodging (check-in), restaurant (tab), and car rental (pick-up) industries, where an approval is received for an estimated amount prior to the finalization of the charge amount.

Authorization Request

A merchant's request for an authorization to accept a cardholder's sales transaction. An authorization request can occur electronically via a credit card processing terminal or POS, or via telephone as a voice authorization.

Authorized User

Any person to whom you give permission to use a credit card account.

Authorized User

Any person to whom you give permission to use a credit card account.

Previous PostPost with a slider and lightbox
Next PostPost with YouTube Video